HSBC investors to revolt on pay and strategy

HSBC will come under fire on both its boardroom pay and strategy in what is expected to be an acrimonious shareholders' meeting on Friday.

It will probably face a significant protest vote against proposed amendments to its remuneration policy. Corporate governance expert PIRC is advising a vote against the scheme, stating: 'The scheme is excessive, with a maximum payout equivalent to seven times salary and [...] the majority of performance conditions are insufficiently stretching.'

The bank has also been given an 'amber' rating by the Association of British Insurers, indicating potential serious issues of which investors should be aware before they vote. Knight Vinke, the activist investor which is campaigning for a change of strategy at the bank, is concerned that the remuneration scheme will encourage executives to use excessive leverage or borrowings, increasing risk for its shareholders.

Last week, almost half of Royal Dutch Shell's investors refused to approve its remuneration report because of concern about retention bonuses for three directors, while almost 40 per cent of shareholders in GlaxoSmithKline also abstained or voted against its report for the same reason.

Knight Vinke is also expected to urge the bank to appoint an independent adviser to help its non-executive directors understand its strategic options. Glen Suarez, director of investments at Knight Vinke, points out that four of the bank's non-execs are full-time chief executives or finance directors at other companies, and six more are chairmen of major companies: 'It is incredible that these non-executives can, in the 24 days which they say they spend on HSBC, digest all the information needed.'